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Legal Blog:
Jan
01
1998
Sheltering
We had previously referred you to two cases in which lien claimants failed to commence an action to enforce their liens at their peril (see November/95 & March/97 newsletters). They attempted to shelter (i.e. to rely on the actions commenced by other lien claimants) and found that their liens were discharged as result of their failure to commence their own actions. They relied on a provision of the Construction Lien Act that allows sheltering if “the nature of the relief claimed in the statement of claim under which it is sheltered” is the same as the relief being claimed by the lien claimant attempting to shelter under that statement of claim.
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01
1998
Blackmail
There are two reasons to register a lien against lands on which a construction project (the “Project”) is being built. First, there is a measure of security, which in many cases is illusory, if the person with whom the lien claimant has contracted (the Payor”) is unable or unwilling to pay the monies owed under the contract. Second, blackmail; the lien claimant, who may have an otherwise shaky claim and hopes that the very act of a placing a lien against the Project causes the funds, otherwise to be paid to the Payor, to be cut off. The lien claimant then hopes that the spectre of a restricted cash flow will cause the Payor to pay up. Unfortunately, the second reason is being used all too often.
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